Andrew Ross Sorkin, financial columnist for the New York Times and co-anchor of CNBC’s Squawk Box, wrote a column last week examining certain proposals that would increase taxes on the wealthy. It was an insightful column addressing a topic that has certainly taken center stage with changing influences in Congress and among the American public.
One section of Sorkin’s column addressed charitable giving and whether certain limitations to the charitable deduction should be implemented for wealthy Americans. As Sorkin writes:
Philanthropic giving is laudable, but it can also be a tax-avoidance strategy. Is there a point at which charitable giving should be taxed?
I’m not sure what the right answer is. But consider this question posed by several philanthropic billionaires: Should the rich be able to gift stock or other assets to charity before paying capital gains taxes?
Sorkin suggests considering a provision that would tax gifts of assets to charity or grant-making foundations that would otherwise be subject to capital gains taxes. He is understandably hesitant in suggesting charitable donations become more taxed, especially given the services charitable organizations provide that would otherwise be expected of the government. Unfortunately, implementing a provision like this would certainly change how wealthy Americans would treat these assets, perhaps even deciding not to donate them at all.
We are already mired in a decade-long decline in the number of Americans who give to charity. A study released last week confirmed that this trend will continue with the number of small and midsized gifts declining in 2018. The study also found that charitable giving has failed to keep pace with inflation. As low- and middle-income givers decline in the number and amount donated, now is not the time to do something that would decrease giving by the one group that hasn’t reduced its charitable contributions, and whose giving has offset the decline of other givers.
We have no position on whether or not the country should consider policies that increase taxes on the wealthy. We are only arguing that we shouldn’t do it on the backs of charities.